Starting your own business in Thailand can be a daunting task to achieve. There are a few challenges that you will need to overcome and several long procedures that you will need to abide by. However, if you get all of them right, the business can turn into a profit-making machine over time and will be lucrative and enjoyable. Thailand is currently the second-largest economic country with an almost 6% rise in its GDP in the Southeast Asian region only after Indonesia. Even the World Bank has identified Thailand as one of the most capable and successful countries in terms of economy in the last few years. So, all these make the idea of opening a business in Thailand even more appealing. However, before you embark on this journey of opening a small business in Thailand and then expanding it, even more, you will need to learn a few things about the Thai business rules and regulations. So today, we will discuss the same in this blog and let you know about the important details regarding these.
Step-by-step guide for setting up a business
Setting up a business was never easy. It is difficult in your home country and becomes even more hectic abroad. A lot of things and factors come into play before you can finally work on the business plan. Have a look at these steps that you should be aware of before finalizing the business plan.
- Follow the rules for business first
The Foreign Business Act of 1999 is the law that allows foreign businesses to come and set up themselves in the country. It is important to know that Thailand is very strict regarding the imposition of the laws and every business should follow them regardless of anything. Anyone who fails to abide by them will be charged with a heavy penalty which often ranges from 100,000 – 1,00,000 Baths. No law prohibits the general running of a business by foreigners in Thailand. But foreigners cannot engage in
- Newspaper publishing, radio or television broadcast
- Arable farming, rice farming or orchard farming
- Rearing any kind of livestock
- Processing of food from the forest
- Prohibition in the fishery in specific zones
- Cannot extract Thai medicinal herbs
- Trading and auctioning of antiques that hold cultural or historic importance to the country
- Manufacturing or casting of Buddha images
- Trade-in real estate properties
- Acquire property for running your business
Yes, there is a law which does not allow you to entirely own a property in Thailand. When you are planning to do business in Thailand, you will have to abide by this rule. Even though before 1997, no foreigner could even own any assets or property in Thailand. But now, these rules have been relaxed to some extent. What you can do to set up your business is to be in a partnership with a Thai citizen possibly in a Thai majority limited company. Then both of you can agree to an agreement that will allow the Thai citizen to hand you complete power to the foreigner, that is you. Or you can also own an apartment in Thailand provided that the building is 51% owned by a Thai citizen. There is also another way of acquiring property for opening a business in Thailand, which is you can lease a property for 30 years. If you can get land on lease through this route, you will be able to construct a building.
- Open an account in a Thai bank
When you want to open a small business in Thailand, then you may not be eligible to get a checking account during the initial days of your business. However, you will get hold of a savings account from which you can only withdraw cash and you won’t be eligible to get an ATM card with a company account during this time. For monetary transactions, you will need to deposit a withdrawal slip along with your authorized signature and then stamp it with your company stamp. Your bank will then write the individual bank cheque on the request. You can either follow this method and send the cheque or pay in cash. Loans are something which you will not get easily in Thailand. Local banks heckle the process even more and it will seem that getting a loan from an overseas bank is much easier than getting it from a Thai bank.
- Business License and Business Registration
You will need a business license to operate and do business in Thailand legally. The business license provides you with the right to operate your business successfully within the country. To get hold of the business license, you will need to notify the Department of Business Development regarding your plans for opening a business in Thailand. Once your plan and important documents have been verified, they will provide you with the Certificate of Business Operation. Business registration is also important and can be done once the certificate has been obtained. Here are some important documents that you will need to produce so that your business can be registered by the Bureau.
- Articles of Association
- Memorandum of Association
- Application form and list of shareholders
- New directors form signed by each director
- Declaration of Business Operation form
- Company name reservation
- Details of the offices and branches of your business
- Before registering your business, you will be required to deposit an amount that is at least 25% of the initial investment capital into a bank account.
This process takes some time to complete and if you are not sure how to do it, you can take the help of startup consulting firms who will employ professionals for you.
- You will need to obtain a VISA
Any individual who is interested in doing business in Thailand will need to obtain a VISA before they can engage in the business. They will be required to have a Non-Immigrant B (business visa). You must apply for all the VISAs at the Thai embassy or at the Thai consulate in your home country before you travel to Thailand. The fee for obtaining the VISA is 2000 Baht for a single VISA entry which will be valid for 3 months. For a one-year multi-entry VISA, you will need to pay 5000 Baht. Without the VISA and all the related documents, you will not be able to travel to Thailand and start working on your business plans. You will also need to keep in mind the expiry date of the visa because once it is expired you will not be able to stay in Thailand. You must return to your country before the VISA expires or renew it with time left.
- You will need to register and pay taxes
Filing the return for your taxes is very much important in Thailand. You will need to timely submit your taxes and make sure that all your business transactions, bank accounts and all other assets have been shown to the Tax department, which will then determine the tax you are eligible to pay. Any laundering with taxes will lead to serious legal issues against you and your company. The Corporate Income Tax (CIT) is the direct tax that will be levied in your company or partnership which is carrying business within the Thai territory. Here are some details about the tax.
- The tax that needs to be paid by associations or foundations will be 10%.
- The royalties which are paid to the associations or the foundations will be subject to at least 10% tax.
- The government agencies are credited to withhold tax at 1% on every type of income paid.
In terms of filing your taxes and managing all the accounts of the business, you can take the help of business startup consultants who employ professional auditors and CAs.
- Hire a professional translator
Even though many people in the Thai urban areas can speak and understand English well, you must hire a professional translator. Why is it so? This is because most of the official forms and regulations which you will need to fill up will be in the Thai language. So, either you need to master the language or take the help of a translation expert. It also helps you to communicate with people more efficiently in the initial days of a business. There are several agencies offering help in this field and you can easily get hold of a good translator from them.
So, here is the step-by-step guide about the important details that you will need to know before you start a business in Thailand. All these points are crucial and we will recommend you to give them a proper read before you further plan your endeavours of running a business.
Final Words – Thailand is a lucrative place to start your business and there are various opportunities in which you can make the most to provide your business with the boost you need. However, you must follow all the steps that we have mentioned in this blog to complete all the proceedings for setting up the business legally and professionally. You can always take the help of an agency which offers startup consulting services to understand the steps clearly.